Luxembourg appeals the Commission’s decision in the Engie case

The Luxembourg Government has decided to appeal the decision of the European Commission in the Engie case. In accordance with the Commission’s decision, Luxembourg will recover the alleged aid, pending the outcome of the legal proceedings.

Luxembourg has fully cooperated with the Commission throughout its investigation and shares the Commission's objective of combating tax evasion. Luxembourg entirely supports the OECD's BEPS (base erosion and profit shifting) project and actively contributed to the adoption of the anti-tax avoidance directives (ATAD) on the European level, in the spirit of the level playing field. On 15 June 2018, the Government adopted a bill transposing the first ATAD directive into Luxembourg law and amending provisions of the tax legislation, with the aim of henceforth preventing situations such as raised by the Commission in its decision.

However, Luxembourg considers that it did not grant Engie state aid incompatible with the internal market within the meaning of Article 107 (1) of the Treaty on the Functioning of the European Union, given that Engie was taxed in accordance with the tax rules in force at the time, without benefitting of any selective treatment.

The Minister of Finance, Pierre Gramegna, comments: "While the application of the rules in force at the time might have resulted in a situation that no longer reflects the current spirit of the national and international tax framework, such an application does not constitute state aid. The purpose of the appeal procedure is therefore not to call into question the progress made in the fight against tax evasion, but to establish that the rules in force at the time were in conformity with EU law and to ensure predictability in tax matters."